Fighting the corporate back-hander- the 2010 Bribery Act

With phone hacking throwing a harsh spotlight on modern business ethics, the need for robust corporate governance has never been clearer. A good moment perhaps, to discuss the 2010 Bribery Act, the most important piece of Anti-Corruption legislation passed in the UK for over a century.

The Bribery Act creates an entirely new offence where organisations become criminally responsible for bribes on their behalf by ‘Associated’ persons either in or outside the UK. Ignorance of the bribery itself is no defence – once it occurs the organisation is liable. Furthermore, the list of ‘Associated’ persons is deliberately broad and can include agents, distributors, suppliers, intermediaries, joint venture partners and introducers.

The only defence is for an organisation to show was that it had ‘adequate procedures’ in place to prevent bribery. These will include:

• a clear process for reporting concerns

• top level commitment to anti-corruption via an anti-corruption statement and policy

• clear evidence of communication and training relating to anti-corruption

 and

• appropriate due diligence and risk assessment of persons who may become “associated with” the organisation.

Overall, it’s unlikely the Act will lead to a large number of prosecutions. Nor will it outlaw corporate hospitality, as in order to commit an offence you must provide a gift, benefit or hospitality intending to procure improper favour from the recipient. Legitimate hospitality used to thank existing customers or to attract new ones will not be encouraging improper favour and is therefore perfectly permissible. But we do recommend that you keep a register of all gifts and hospitality, both received and given.

Furthermore, smaller businesses fearing an avalanche of extra paperwork and legal costs shouldn’t panic. It’s clear that they can communicate their anti-bribery policies orally and still comply with the new law.

Get it wrong however and the penalties are harsh. Along with prison sentences, there’s the risk of unlimited fines, blacklisting from EU contracts and the forfeiture of the value of illegal deals under related Proceeds of Crime and money laundering laws.

The Serious Fraud Office encourages self-reporting to avoid the most severe consequences but businesses should only take this route after careful thought and taking specialist legal advice.

For more information on the 2010 Bribery Act, please contact info@capitallaw.co.uk